Quarterly Earnings at Xerox Rose on Sales of Color Copiers

Thursday

Jul 26, 2007 at 4:35 AM

Color pages are five times more profitable for Xerox than black-and-white prints.

BLOOMBERG NEWS

The Xerox Corporation, the world’s largest maker of high-speed color-printing devices, said yesterday that second-quarter earnings rose 2.3 percent on sales of color copiers and supplies. The company increased its full-year forecast.

Shares of Xerox fell as analysts called equipment sales disappointing. Net income climbed to $266 million, or 28 cents a share, from $260 million, or 26 cents a share, a year earlier. Revenue rose 5.8 percent, to $4.21 billion, the company, based in Stamford, Conn., said yesterday.

Sales from color printing increased 12 percent in the quarter. Color pages are five times more profitable for Xerox than black-and-white prints.

The company discounted equipment prices by as much as 10 percent and said customers switched to leases for printers and copiers, prompting investor concern about sales.

“The units are growing but the prices are going down,” said Shannon Cross, an analyst with Cross Research in Livingston, N.J.

Shares of Xerox fell $1.11, to $18.22. Xerox raised its full-year profit forecast to $1.16 to $1.18 a share, from $1.12 to $1.16.

Sales related to color devices rose to $1.53 billion from $1.36 billion a year earlier. Those sales account for 38 percent of Xerox’s revenue. Equipment sales rose 2.9 percent, to $1.14 billion, an increase Bill Shope, an analyst with JPMorgan Securities in New York, called disappointing.

“We were hoping for some modest growth here,” Mr. Shope wrote. “Pricing and mix shifts appear to be the primary culprits.”

Xerox said its purchase in May of an office equipment retailer, Global Imaging Systems, increased its reach to small and midsize companies by 50 percent. The $1.5 billion purchase of Global Imaging added about 200,000 United States customers and 1,400 sales representatives.

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